August 19, 2011 / 10:47 AM / 8 years ago

Global LNG-Asian LNG prices rise above $15/mmBtu on demand

PERTH/LONDON, Aug 19 (Reuters) - Asian liquefied natural gas (LNG) spot prices for September rose above $15 per million British thermal units (mmBtu) during the week, with strong Asian demand keeping prices high.

“Asian markets were holding just north of the $15 level for cargoes as the demand for LNG continues to ramp up,” ICAP analysts said in a note.

Top LNG importers Japan and South Korea both reported higher imports for July.

Japan’s LNG imports rose 14.3 percent in July compared with the same period a year earlier as the nation continues to depend on the fuel to replace nuclear power lost due to the March earthquake, while South Korea’s imports increased 9 percent year-on-year.

Spot prices in Asia have now risen over 50 percent since Japan’s earthquake in March boosted demand for LNG. LNG-AS

The spread between Asian spot prices around $15.10 and British prices was about $5.40 per mmBtu this week, wide enough to coax cargoes to Asia from the Atlantic. Recent Nigerian cargoes have been sent east to higher-paying Pacific markets.

Shipments to Asia from the Middle East and the Atlantic Basin increased by 1.357 million and 1.146 million metric tons respectively in July, while Asia-Pacific shipments of LNG to Asian buyers fell, Waterborne LNG analysts said in a note.

Qatar, Nigeria, Trinidad, Yemen, and Abu Dhabi had the largest year-over-year increases shipments to Asia.

And the trend looks set to continue, despite extremely high shipping costs of just under $100,000 a day.

“Spreads to Asia from the Atlantic remain at all time highs with winter 11 spreads now looking close to $7.50,” ICAP analysts said.

Supply from the Atlantic Basin was also seen in South Korea’s long term supply agreements with Shell and Total signed this week. Under the deals, totaling $84 billion, cargoes will be sourced from Australia, and from company portfolios across the Atlantic Basin. [ID: nL3E7JH056]

The boom in Asian supply may leave European import terminals short as Asia sucks up Atlantic Basin supply, analysts said this week.

In the Atlantic, U.S. gas prices hit five month lows on Thursday and ample supply continued to deter spot LNG shipments to terminals there.

Flows from U.S. terminals hit 0.63 billion cubic feet per day on average last week, according to Tudor Pickering Holt analysts. The flows are near contractual minimums, as traders ship gas elsewhere. U.S. deliveries averaged 1.2 bcfd in 2010.

For a table showing LNG tankers heading to Northwest Europe, click here:

For tankers heading to the US, click here: (Additional reporting by Oleg Vukmanovic in London; Editing by Sugita Katyal)

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